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Exam 13: Accounting for Corporations

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Question 41

True/False

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Paid-in capital is the total amount of cash and other assets the corporation receives from its stockholders in exchange for its stock.

A) True
B) False

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Question 42

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A company issued 60 shares of $100 par value common stock for $7,000 cash. The journal entry to record the issuance is:

A) Debit Cash $7,000; credit Common Stock $6,000; credit Paid-in Capital in Excess of Par Value, Common Stock $1,000.
B) Debit Cash $7,000; credit Common Stock $7,000.
C) Debit Cash $7,000; credit Paid-in Capital in Excess of Par Value, Common Stock $6,000, credit Common Stock $1,000.
D) Debit Investment in Common Stock $7,000; credit Cash $7,000.
E) Debit Common Stock $6,000, debit Investment in Common Stock $1,000; credit Cash $7,000.

F) B) and E)
G) None of the above

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Question 43

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A company paid $0.48 in cash dividends per share. Its earnings per share is $3.20 and its market price per share is $20.00. Its dividend yield equals:

The declaration of cash dividends increases retained earnings.

Purchasing treasury stock reduces the corporation's assets and stockholders' equity by unequal amounts.

What is a stock split? How is a stock split different from a stock dividend?

A proxy is a document that gives a designated agent the right to vote a shareholder's stock.

The term restricted retained earnings refers to statutory but not contractual restrictions.

The number of shares that a corporation's charter allows it to sell is the ________ stock.

The date of record is the date that directors vote to pay a cash dividend to shareholders.

A corporation with $10 par common stock issues a small stock dividend. The capitalization of retained earnings is equal to:

A company had a beginning balance in retained earnings of $430,000. It had net income of $60,000 and paid out cash dividends of $56,250 in the current period. The ending balance in retained earnings equals:

Prior to June 30, a company has never had any treasury stock transactions. A company repurchased 100 shares of its $1 par common stock on June 30 for $40 per share. On July 20, it reissued 50 of these shares at $46 per share. On August 1, it reissued 20 of the shares at $38 per share. - What is the journal entry necessary to record the repurchase of stock on June 30?

Hutter Corporation declared a $0.50 per share cash dividend on its common shares. The company has 20,000 shares authorized, 9,000 shares issued, and 8,000 shares of common stock outstanding. The journal entry to record the dividend declaration is:

A company is authorized to issue 750,000 shares of $2 par value common stock. Prepare journal entries to record the following selected transactions that occurred during the company's first year of operations: Jan. 10 Sold 102,000 shares of common stock for $8 cash per share. 15 Exchanged 10,000 shares of common stock for equipment with a market value of $70,000. Feb. 1 Exchanged 500 shares of common stock for $3,000 of legal services incurred during the company's organization.

Stocks that pay relatively large cash dividends on a regular basis are called:

A company had a beginning balance in retained earnings of $400,000. It had net income of $50,000 and paid out cash dividends of $55,000 in the current period. The ending balance in retained earnings equals:

Record the following transactions of Naches Corporation in general journal form: (a) Reacquired 8,000 of its own $3 par value common stock at $20 cash per share. The stock was originally issued at $15 per share. (b) Sold 2,000 shares of the stock reacquired under part (a) at $23 cash per share. (c) Sold 3,000 shares of the stock reacquired under part (a) at $19 cash per share.

Sweet Company's outstanding stock consists of 1,000 shares of cumulative 5% preferred stock with a $100 par value and 10,000 shares of common stock with a $10 par value. During the first three years of operation, the corporation declared and paid the following total cash dividends. $\begin{array}{ll}&\text { Dividend Declared }\\\ \text { year 1 } & \$ 2,000 \\\text { year 2 } & \$ 6,000 \\\text { year 3 } & \$ 32,000\end{array}$ - The amount of dividends paid to preferred and common shareholders in year 3 is:

A corporation issued 5,000 shares of $10 par value common stock in exchange for some land with a market value of $70,000. The entry to record this exchange is: